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Profile: Hire Station Hire Station back on track Catherine Stratton talks with Hire Station Managing Director John Singleton about the initiatives he has undertaken to revive the company’s fortunes. John Singleton proved his ability to take radical decisions when he joined the then Vibroplant in December 1998, charged with the task of ‘turning round’ the company’s ailing general plant and powered access businesses. He had previously been Sales Director of Artex Rawlplug (part of BPB Industries) and was well experienced in builders’ merchant-type activities, but not in the hire market. He was, therefore, able to view Vibroplant’s wide range of hire activities without any preconceptions. His evaluation of both the general plant and powered access markets was that amongst their distinguishing characteristics were low barriers to entry and continuous pricing pressure. With regard to Vibroplant’s activities in these areas, the return on capital employed was very poor and management was expending enormous time and effort to improve performance to no avail. As is often the case, it was also having a stultifying effect on other parts of the business as their potential was held back. Radical solution John Singleton, along with the Board, advocated a radical solution to the company’s problems: to exit both general plant (with the exception of telescopic handlers, which were achieving a better return) and powered access. This was an initiative which took many of the company’s competitors by surprise; for many years Vibroplant had been the most successful non-operated plant hirer in the UK, but times had changed and brave decisions were required. In the course of 2000 and 2001, the company made a series of planned disposals, and thereafter sought to establish itself as a group of ‘specialist’ hire businesses. The telescopic handler fleet was developed into a national business under the name of UK Forks, and Airpac Oilfield Services, Torrent Trackside and Groundforce were also retained as specialist divisions, alongside the company’s tool hire operations. The company’s initial foray into the latter market had been back in the 1980s with Prospect Tool Hire, but its first move of significance came in 1996 when it bought Cannon Tool Hire. A series of acquisitions followed so that by 2000 there were over 40 locations. The company then expanded significantly with the purchase of the 24 depot network of Nottingham-based Handi Hire. Vibroplant’s metamorphosis into a group of specialist hire businesses brought the change of name to Vp. John Singleton moved on to build up Vp’s thriving Groundforce operation (originally focused on trench shoring equipment, but now encompassing other related activities such as piling), UK Forks and Airpak Oilfield Services. By 2003, however, while most of Vp’s specialist activities were prospering, its largest turnover business - the tool hire operation, now named Hire Station, was performing poorly. In the year ended 31 March 2003, Hire Station had accounted for 48% of the Group’s £75m revenues but only 10% of operating profits. John Singleton’s successful implementation of the Group’s re-organisation made him the obvious choice to bring Hire Station back onto a profitable path. He describes the task which faced him in January 2004 “as the biggest challenge so far” partly because it is a much more ‘labour intensive’ business. His initial appraisal of the business led to the conclusion that the Hire Station cost base was geared to a business doing one and half times its actual turnover. The business had grown “like Topsy” through a series of acquisitions and developed into five or six regional companies. It had taken some years for these to be integrated under one banner and for the financial controls to be unified. Simplifying the structure John Singleton made two key appointments to advance the consolidation process: Ian Weston was appointed as Operations Director to manage the branches, and Paul Rogers became Financial Director. A major problem was that the company had too many managers and one of John Singleton’s first tasks was to take out a significant tier of middle management. Overall he sought to simplify the structure of the business, putting in place a network of regional directors. He scrutinised the performances of the individual branches and closed about half a dozen of the worst. Another difficulty Hire Station faced was that its under-performance meant it was not able to invest adequately in new equipment - a dilemma that affects all hirers when they are not making appropriate returns, but one which impacts particularly on tool hirers because of the shorter life cycle of tools. John Singleton identified 1,800 product lines held by Hire Station but found that only about 250 of these were generating between 80% and 90% of the turnover. He took steps to rationalise the range and to invest in strategic areas such as alloy towers. This policy of targeted investment positioned the tool hirer to make better returns on capital and brought improved levels of capital expenditure, which rose to £5.7m in 2004/2005, compared with £4.2m in the previous year. A further cause for concern was that Hire Station lacked larger customers, undoubtedly because of the weakness of sales activity and direction. John Singleton put in place a National Accounts team to negotiate national accounts. He concedes that Hire Station still has a weak presence in some geographical areas but believes that the company is not losing out because of this; he says that between 85% and 90% of the market is within one hour’s drive of the company’s network. In order to expand Hire Station’s revenue base, he is now looking at increasing capacity in individual branches by adding mezzanine floors, which he says will add between 40% and 50% to their capacity. Growing confidence In looking to build up the National Account business, John Singleton realises that Hire Station has to have a modern fleet; its average age is now between two-and-a-half and three years, with the top 250 lines of equipment considerably younger. Another sign of growing confidence is the company’s willingness to introduce new products; last year it was the first hirer to offer the Towermatic and competitors are now investing in this aluminium scissor access platform. Shopfitters form a significant part of Hire Station’s customer base and Towermatic is particularly useful in helping them meet Work at Height regulations. Alongside the traditional tool hire product range, Hire Station also includes Safeforce, its safety and lifting activity, in 30 of its 65 locations. The safety operations saw significant expansion last year when Vp acquired the Pivotal Services Group from Babcocks. Innovation has also been a key part of the whole group’s customer service strategy; it is now over a decade since Vibroplant established a call centre for its plant operations. This concept was extended to tool hire in October 1999 with the initiation of ‘The Hire Station’ as a national tool hire call centre. With John Singleton’s subsequent re-organisation of Hire Station now largely completed, the company has embarked on developing this strategy much further. He relates how last year it became clear that a region of Hire Station’s was under-performing and was faced with a shortage of management. It was decided to divert all of its telephone calls into the national call centre in Manchester with the immediate result of an increase in activity levels. John Singleton’s concept is that a situation should be created whereby branches act as the distributors of Hire Station’s services while the transactional elements of the business are handled by the call centre, where a team of dedicated people respond to customers’ requests throughout the day. There is no doubt that the results have been extremely pleasing, with the region in question moving from a loss-making position last year, to become the company’s most profitable region. This success has encouraged the company to take a further step down the call centre line. It is now gradually introducing a system, through BT Telephony, whereby any calls to branches which go unanswered after three or four rings will be diverted to the Manchester call centre. A display board indicates which branch the call has been diverted from so that the operator can respond appropriately. This service is now being ‘rolled out’ and will soon be in place across all branches. John Singleton says that managers have been very keen to get the ‘default’ system in place as it is a very cost-effective way of dealing with the problem of potentially missed calls, and works well where there is a high level of activity. The system is undoubtedly efficient, but it also sees a move away from the traditional ‘power base’ of the branch, as it leaves the call centre determining which location should transact the order. With the increasing emphasis by most of Hire Station’s national competitors on national accounts, this is of less importance than it would have been a few years ago. Hire Station’s Call Centre room is impressive with its ranks of desks and electronic information boards logging incoming calls. Unlike so many call centres, which seem designed to frustrate the customer by imposing a barrier between him and all forms of human contact, this one does give ready access to an operator and seeks to ensure that both orders and queries are dealt with in a friendly and efficient manner. The full implementation of this system is playing an important part in Hire Station’s recovery and is assisting the tool hirer to expand its revenue base. John Singleton is confident that Hire Station now only needs to add between six and eight locations to its current 65 to have good national coverage and he is looking to acquire good independent hirers in those localities. His ability to focus on expanding Hire Station indicates how far down the recovery path the company has come. The first real tangible sign that Hire Station had turned the corner came with the announcement of Vp’s half year results last December, when Hire Station achieved a 15% increase in turnover to £20.0m and a profit of £900,000, compared with a loss of £0.3m in the same six months of 2004. John Singleton concedes that Hire Station is perhaps still some way from making “acceptable” margins, but there’s no doubting his confidence that Hire Station is back on track to play its full part in the UK tool hire market. • Executive Hire News › Archives › April 2006 › Profile: Hire Station › Hire Station back on track
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